Statement of Rep. Alma Adams: The Cumulative Burden of President Obama’s Executive Orders on Small Contractors

Sep 13, 2016

Thank you, Mr. Chairman for holding this important hearing.  

Each year the Federal government spends over $400 billion in taxpayer dollars to pay private companies for goods and services.  In the past, Congress has used this significant financial might to help drive forward a number of policy goals.   One such policy goal that is a priority for this Committee and for Congress is the participation of small businesses in the federal marketplace.  
As such we’ve passed legislation aimed at ensuring all small businesses get a fair shot at these projects. Likewise, this Committee has worked in a bipartisan manner to help women and minority-owned businesses navigate the procurement process.

Recognizing that, as the country’s largest consumer of goods and services, the federal government has the ability to use its buying power to advance priorities important to our nation, President Obama signed several Executive Orders and Presidential Memorandum setting standards for contractors doing work for the government.  

While funds received from federal contracts boost local economies and allow firms to hire more employees, some firms play by their own set of rules to win these lucrative dollars.  As a result, law-abiding businesses are disadvantaged and pushed out of the marketplace.

Therefore, these executive actions are aimed at leveling the playing field for all contractors.  From ensuring that contracting officers are looking at labor law violations when evaluating a firm’s responsibility, to protecting employees from discrimination on the basis of sexual orientation, and providing sick leave and a higher minimum wage, these executive actions cover a wide range of areas to not only protect employees but also protect the government from undue risk.  

We should be clear -- of the businesses that perform work for the government, the overwhelming majority comply with laws and do right by their employees, while providing excellent goods and services at competitive prices.  However, this Committee has heard of a number of bad actors that skirt the law and continue to receive federal contract work.  

For instance, according to one report, almost half of the total initial penalty dollars assessed for Occupational Safety and Health Administration violations in 2012 were against companies holding federal contracts. However, these businesses were rarely debarred or suspended from the federal marketplace as a result of their unsafe working environments.  

Labor laws are crucial to a healthy economy.  Allowing habitual violators to continue working with the federal government without requiring remedies puts employees at risk of injury and the government at risk of delays and additional costs.

With regards to the executive orders on increasing wages and protecting employees seeking equal pay, studies have shown that higher wages leads to better quality of services, lower employee turnover, and more robust bidding by high-road employers, all of which improve the efficiency and economy of federally-contracted work.

While these executive actions have resulted or will result in new processes and procedures for federal contractors, many of the changes will fit into the existing procurement process with the contracting officer using additional criteria to consider.  Yet, as we will hear today, many small firms are concerned with the cumulative impact implementing all executive orders will have on their businesses.  

Small businesses provide quality goods and services at affordable prices, meaning a better deal for the government and the taxpayer. Yet, they have smaller margins and new regulations can be harder for them to absorb.  With small businesses creating over two-thirds of new jobs, our economy needs both small businesses and sufficient employee protections to properly operate.

Accordingly, it is important that we find a balance in which small businesses are not overly burdened by complying with the guidelines while not diluting the protections afforded to law-abiding contractors through these executive orders.

With that, I look forward to hearing the witnesses’ perspective on these important topics and yield back the balance of my time.